Interim Results - Part 2

Spirent PLC
30 August 2001


PART 2

1.  Segmental Analysis

£ million                                Half year 30 June          Year 31
                                                                  December
                                   _________________________    ___________
                                      2001     %    2000    %     2000    %
Turnover                                                                   
Telecom Test                         141.3    31   114.0   38    283.7   42
Network Monitoring                   113.9    25       -    -      5.5    1
                                   _______   ___   _____  ___   ______  ___
                                                                           
Communications                       255.2    56   114.0   38    289.2   43
Network Products                      91.2    20    90.2   30    181.4   27
Systems                               62.8    14    55.9   18    113.1   17
Sensing Solutions                     46.6    10    43.5   14     90.7   13
                                   _______   ___   _____  ___   ______  ___
                                                                           
                                     455.8   100   303.6  100    674.4  100
Divested operations:                         ___          ___           ___
Systems                               3.1           12.8          22.3 
                                    ______         _____        ______     
                                                                           
                                     458.9         316.4         696.7     
                                    ______         _____        ______     
Operating (loss)/profit                                                    
Telecom Test                          33.0    41    38.8   66     97.1   71
Network Monitoring                    29.6    37       -    -      1.5    1
                                   _______   ___   _____  ___   ______  ___
                                                                           
Communications                        62.6    78    38.8   66     98.6   72
Network Products                       9.5    12    13.5   23     25.3   18
Systems                                2.9     4     1.0    2      2.1    2
Sensing Solutions                      4.6     6     5.7    9     11.3    8
                                   _______   ___   _____  ___   ______  ___
                                      79.6   100    59.0  100    137.3  100   
             
Divested operations:                  
Systems                              (0.2)   ___     0.6  ___      0.6  ___
                                    ______         _____        ______     
Operating profit before goodwill         
amortisation and exceptional items    79.4          59.6         137.9  
                                    ______         _____        ______     
Goodwill amortisation:                                                     
Telecom Test                        (14.9)         (7.6)        (19.8)     
Network Monitoring                  (30.0)             -         (2.6)     
                                    ______         _____        ______     
                                                                           
Communications                      (44.9)         (7.6)        (22.4)     
Network Products                     (0.7)         (0.5)         (1.3)     
Systems                              (0.3)         (0.3)         (0.6)     
Sensing Solutions                    (0.8)         (0.7)         (1.4)     
                                    ______         _____        ______     
                                                                           
                                    (46.7)         (9.1)        (25.7)     
                                    ______         _____        ______     
Exceptional items:                                                         
- goodwill impairment                                                      
Telecom Test                       (192.3)             -             -     
Network Monitoring                  (55.3)             -             -     
                                    ______         _____        ______     
                                                                           
Communications                     (247.6)             -             -     
                                    ______         _____        ______     
                                                                           
- stocks and debtors provisions                                            
- Telecom Test                      (14.9)             -             -     
- reorganisation costs               (0.5)             -             -     
- acquisition retention bonuses      (2.9)             -         (2.2)     
                                    ______         _____        ______     
                                                                           
Operating (loss)/profit            (233.2)          50.5         110.0     
                                    ______         _____        ______     
                                                                           

2.  Geographical Analysis

£ million                              Half year 30 June          Year 31
                                                                 December
                                   _________________________   ___________
                                      2001     %    2000    %     2000    %
                                                                           
Turnover by market                                                         
Europe                               108.5    24    92.9   30    194.7   29
North America                        292.1    64   169.3   56    390.8   58
Asia  Pacific, Rest  of  Americas,    
Africa                                55.2    12    41.4   14     88.9   13
                                   _______   ___   _____  ___   ______  ___
                                                                           
                                     455.8   100   303.6  100    674.4  100
                                             ___          ___              
Divested operations:                   2.1           5.8          12.2     
Europe                                 0.2           5.5           7.3  
North America                            
Asia  Pacific, Rest  of  Americas,      
Africa                                 0.8           1.5           2.8   
                                    ______         _____        ______    
                                                                          
                                     458.9         316.4         696.7     
                                    ______         _____        ______    
                                                                           
                                                                           
Turnover by source                                                         
Europe                               106.8    24    86.6   29    174.0   26
North America                        329.1    72   198.1   65    461.7   68
Asia  Pacific, Rest  of  Americas,    
Africa                                19.9     4    18.9    6     38.7    6
                                    ______         _____        ______    
                                                                           
                                     455.8   100   303.6  100    674.4  100
                                             ___          ___           ___
Divested operations:                    
Europe                                 3.1           7.7          15.3    
North America                            -           5.1           7.0    
                                    ______         _____        ______    
                                                                          
                                     458.9         316.4         696.7     
                                    ______         _____        ______    
                                                                           

2. Geographical Analysis continued

£ million                               Half year 30 June         Year 31
                                                                 December
                                   _________________________   ___________
                                      2001     %    2000    %     2000    %
                                                                           
Operating (loss)/profit by source                                          
Europe                                12.2    15    11.2   19     19.0   14
North America                         66.1    83    46.4   79    115.9   84
Asia Pacific, Rest of Americas,        
Africa                                 1.3     2     1.4    2      2.4    2
                                    ______   ___   _____  ___   ______  ___
                                                                           
                                      79.6   100    59.0  100    137.3  100
                                             ___          ___           ___
Divested operations:                 
Europe                               (0.2)           0.7           0.9     
North America                            -         (0.1)         (0.3)     
                                   _______         _____        ______     
                                                                           
Operating profit before goodwill      
amortisation and exceptional items    79.4          59.6         137.9     
                                   _______         _____        ______     
Goodwill amortisation:                                                     
Europe                               (0.8)         (0.6)         (1.3)     
North America                       (45.7)         (8.3)        (23.4)     
Asia Pacific, Rest of Americas,      
Africa                               (0.2)         (0.2)         (1.0)     
                                   _______         _____        ______     
                                                                           
                                    (46.7)         (9.1)        (25.7)     
                                   _______         _____        ______     
                                                                           
Exceptional items:                                                         
-  goodwill impairment  
   North America                   (247.6)             -             -  
-  stocks and debtors               
   provisions 
   North America                    (14.9)             -             -     
-  reorganisation costs              (0.5)             -             -     
-  acquisition retention bonuses     (2.9)             -          (2.2)     
                                   _______         _____        ______     
                                                                           
Operating (loss)/profit            (233.2)          50.5         110.0     
                                   _______         _____        ______     
                                                                           

Average exchange rates                                                     
US dollar                             1.44          1.57          1.51     
Euro                                  1.61          1.63          1.64     

3.  Earnings Before Interest, Taxation, Depreciation, Amortisation and
    Exceptional Items (EBITDA before exceptional items)
 
£ million                                                              Year
                                          Half year 30 June     31 December
                                          _________________      __________
                                             2001        2000          2000
                                                                           
Operating (loss)/profit of the Group      (233.2)        50.5         110.0
Exceptional items:                                                         
   Other (see note 4)                        18.3           -           2.2
   Goodwill impairment                      247.6           -             -
Goodwill amortisation                        46.7         9.1          25.7
Depreciation                                 17.2        11.3          25.1
                                           ______      ______        ______
                                                                           
                                             96.6        70.9         163.0
                                           ______      ______        ______
                                                                           
                                                                           


4.   Exceptional Items - Other

£ million                                                              Year
                                        Half year 30 June       31 December
                                        __________________     ____________
                                               2001     2000           2000
                                                                           
Stocks and debtors provisions                  14.9       -               -
Reorganisation costs                            0.5       -               -
Acquisition retention bonuses                   2.9       -             2.2
                                             _______    _____        _______
                                                                           
                                               18.3        -            2.2
Tax effect of exceptional items                 5.7        -            0.7
                                            _______    _____        _______
                                                                           
                                               12.6        -            1.5
                                            _______    _____        _______
                                                                           

5.  Goodwill Impairment

In accordance with FRS 10 'Goodwill and intangible assets', goodwill is
reviewed for impairment at the end of the first full financial year
following acquisition and in other periods if events or changes in
circumstances indicate the carrying value may not be recoverable.  The rapid
deterioration in the telecommunications market has led us to recognise
impairment losses for Zarak Systems and Net-HOPPER both acquired in the
second half of 2000.  These losses which total £247.6 million, are the
aggregate from the impairment reviews of each individual income generating
unit and determined in accordance with FRS 11 'Impairment of fixed assets
and goodwill'.  The impairment loss restates the assets to value in use and
has been measured using a pre-tax discount rate of 14.6 per cent.


6.  Taxation

£ million                                                            Year
                                      Half year 30 June       31 December
                                     __________________      ____________
                                           2001      2000            2000
                                                                         
UK taxation                                 6.4       0.7             2.2
Overseas taxation                           7.9      14.0            29.3
Exceptional tax credit                        -         -            (6.4)
                                        _______     _____        ________
                                                                         
                                           14.3      14.7            25.1
Share of joint venture's taxation           2.6       2.5             4.5
Share of associates' taxation               0.3       0.1             1.0
                                        _______     _____        ________
                                                                         
                                           17.2      17.3            30.6
                                        _______     _____        ________
                                                                         
                                                                         


7. Reconciliation  of  Operating  (Loss)/Profit  to  Net  Cash  Inflow  from
   Operating Activities

£ million                                                            Year
                                     Half year 30 June        31 December
                                     __________________      ____________
                                           2001      2000            2000
                                                                         
Operating (loss)/profit                 (233.2)      50.5           110.0
                                                                         
Depreciation                               17.2      11.3            25.1
                                                                         
Loss/(profit)on disposal of                 0.3      (0.6)           (0.8)
tangible fixed assets                     (14.9)       -             -     
                                                                         
Goodwill impairment                       247.6        -               -
                                                                         
Amortisation of goodwill                   46.7       9.1            25.7
                                                                         
Acquisition retention bonuses non         
cash                                        0.3         -             1.4
                                                                         
Deferred income (released)/received      (18.8)       1.5             1.5
                                                                         
Decrease/(increase) in debtors              3.6     (19.0)          (30.7)
                                                                         
Decrease/(increase) in stocks              15.4      (8.2)          (23.7)
                                                                         
(Decrease)/increase in creditors         (25.2)       3.9            17.2
                                        _______     _____        ________
                                                                         
Net cash inflow from operating        
activities                                 53.9      48.5           125.7
                                        _______     _____        ________
                                                                         

8. UK-US GAAP Reconciliation

£ million                                            Half year 30 June
                                                ________________________
                                                     2001            2000
                                                                         
(Loss)/profit attributable to                     
shareholders in accordance with UK GAAP            (260.1)            15.2
                                                 ________        ________
                                                                         
Adjustments:                                                             
Goodwill and Other Intangible Assets      (a)      (73.7)          (22.0)
Stock compensation                        (b)        16.9           (5.6)
Profit on disposal of operations          (c)         0.1             9.8
Other                                     (d)       (2.3)             0.3
                                                 ________        ________
                                                                         
Total adjustments                                  (59.0)          (17.5)
                                                 ________        ________
                                                                         
Net loss as adjusted to accord with US            (319.1)           (2.3)
GAAP
                                                 ________        ________
                                                                         
Basic loss per share: (pence)                     (34.92)          (0.35)

(a)  Goodwill and Other Intangible Fixed Assets

(i) Useful Economic Lives
Under UK GAAP purchased goodwill is amortised over its estimated useful
economic life, which is defined as the period over which the value of the
underlying business acquired is expected to exceed the values of its
identifiable net assets and is presumed to be limited to 20 years.  Under US
GAAP, purchased goodwill is amortised over the estimated period to benefit
from the original purchased goodwill, which is typically in the range of
seven to ten years.  In the six months ended 30 June 2001 this resulted in a
further US GAAP expense of £46.7 million (2000 £12.4 million).

(ii) Capitalisation
Under UK GAAP, goodwill arising on acquisitions prior to 1998 was written
off to retained earnings on acquisition.  In reconciling to US GAAP, such
amounts have been capitalised and amortised over their estimated useful
economic lives of 20 years.  In the six months ended 30 June 2001 this
resulted in a further expense under US GAAP of £9.8 million (2000 £10.7
million).

(iii) Specific Identified Intangible Assets
Other intangible assets included in, and accounted for as, goodwill under UK
GAAP have been reclassified and are amortised over their individually
determined estimated useful economic lives.  These shorter lives for US GAAP
purposes resulted in an additional US GAAP expense in the six months ended
30 June 2001 of £7.1 million (2000 £0.6 million).

(iv) Impairment Review
The UK GAAP impairment charge has been calculated based on the UK GAAP
goodwill balances of Zarak and Net-HOPPER at 30 June 2001.  In reconciling
to US GAAP this impairment charge has been adjusted to allow for: (i) the
different rules regarding the cash flow models used in the impairment
review, (ii) the different amortisation periods between UK and US GAAP,
(iii) the write off of IPR&D arising on Zarak under US GAAP in the year of
acquisition, (iv) the different UK-US GAAP base goodwill amounts arising on
acquisition due to the different methods of quantifying purchase
consideration and (v) the different base net assets.  These factors resulted
in a £10.3 million adjustment to increase the impairment charge under US
GAAP.

(v) Other Purchase Accounting Differences
Other differences between UK GAAP and US GAAP relating to contingent
consideration, the determination of the cost of investment and the fair
values of assets acquired resulted in an adjustment to increase income under
US GAAP in the six months ended 30 June 2001 of £0.2 million (2000 £1.7
million).

(b) Stock-Based Compensation

Under UK GAAP, no compensation expense arises under the Group's various
share option plans.  However, UK corporate governance recommends the
inclusion of performance criteria in UK stock plans and accordingly the UK
ESOS plan includes certain performance criteria, which result in variable
accounting under US GAAP. In reconciling to US GAAP we have used the
intrinsic value basis of calculating compensation expense. In the six months
ended 30 June 2001 the movement in our share price since 31 December 2000
resulted in a UK-US GAAP adjustment to increase income under US GAAP in the
six months ended 30 June 2001 of £16.9 million (2000 £5.6 million expense).

(c) Profit on Disposal

The differences between the UK GAAP and US GAAP treatments of goodwill
arising on acquisitions prior to 1 January 1998 and goodwill amortisation
periods, result in adjustments to profit or losses on disposals of
businesses as the determination of the profit or loss on disposal takes into
account the unamortised balance of goodwill released.  In addition, under US
GAAP, the profit or loss on disposal is stated net of any related cumulative
currency translation differences.  In the six months ended 30 June 2001
these differences resulted in a UK-US GAAP adjustment to the profit/(loss)
on disposal calculation of £0.1 million (2000 £9.8 million).

(d) Other differences between UK GAAP and US GAAP

Further  accounting  differences relating to taxation, pensions,  contingent
compensation and vacation accruals were identified. In aggregate for the six
months  ended  30  June 2001 these adjustments resulted in  further  expense
under US GAAP of £2.3 million (2000 income of £0.3 million).